'Do Something Different'

When Dan Bauer left his assistant manager position at Walmart 20 years ago to manage three c-stores for Pump ‘N Pak, he thought he was switching to an easier gig.

And why not? Instead of the roughly 100,000 square feet of a typical Walmart store, the c-stores were about 2% that size. That’s a lot less shoe leather.

And yet, Bauer says, “How wrong I was.”

The c-store industry’s unique chal­lenges surprised Bauer, but they didn’t discourage him. He distinguished himself as an excellent manager, so much so that when his stores were sold eight years later, Kum & Go execs knew potential when they saw it. The company brought Bauer in, eventually offering him the choice of becoming a district manager or com­pany consultant. He chose the consulting route, thinking it would offer him more freedom—only to find out he was wrong about that, too.

“In consulting, you have to be a go-getter,” he says. “Clients are always chang­ing because after a while they have the knowledge they need, and they terminate your contracts.”

A few years later, when another com­pany bought out many of his clients, he took the offer from one who saw the same potential Kum & Go saw and wanted exclusive access to Bauer’s expertise. At first, going back to managing c-stores “felt almost like a step down,” Bauer says, but it didn’t take long for him to see the huge positive effect he could have on the business.

The four South Dakota c-stores he oversees now are drastically different from each other in location, clientele, resources, successes and problems. And he’s learned that although this industry is far from easy, its challenges can be rewarding.

Back in Pak

With the transition, Bauer had come full circle, back to the brand he started with—a Pump ‘N Pak location hun­gry for improvements. The first store Bauer worked with was a run-down BP-branded location off Interstate 90 in Sioux Falls. “I asked my partner if he thought it was the worst store in Sioux Falls,” says Bauer, “and he told me he thought it was the worst store in South Dakota.”

Interstate locations generally call for at least two bathrooms. But this store had only one, complete with a huge, rotted hole behind the toilet. He fixed up the facilities and got the location’s broken car wash going again, contracting with its manufacturer, LaserWash, to provide regular maintenance.

Soon came a second store, a location that had been closed for about a month when the owners made Bauer an offer he couldn’t refuse. The former owners, wealthy Sioux Falls residents, confessed that c-stores were not their thing, and they handed the business over for next to nothing.

“They told us it wasn’t worth anything to them if it wasn’t making money,” Bauer says. It was a modern-looking building in affluent Sioux Falls area Four Hills—and full of potential. In Bauer’s hands, the turnaround didn’t take long.

In With Both Feet

Today, Bauer and his wife, Becky, own both the stores in Sioux Falls. Becky man­ages them, allowing Bauer to focus on managing his two other locations, which are located in Brookings and owned by his partner. Becky taps into her 30 years of fast-food experience at Hardee’s and Arby’s to enhance the stores. It was Becky who pioneered a Broaster Chicken pro­gram and brought in Taylor Co. soft-serve ice cream machines to the two Brookings stores. Both stores are Pump ‘N Paks with Clark-branded gas, just like the second Sioux Falls store.

“There’s a lot of money in ice cream,” Bauer says. “We get it for around 5 cents an ounce and sell it for around 25 cents an ounce.” The chicken and ice cream are core drivers, delivering consistent revenue throughout the day. The chicken sells in the daytime, and when that dies down around 6 p.m., ice-cream sales pick up.

They also created a walk-up window with a canopy at the Four Hills location, allowing customers to order food—burg­ers, fries, pork sandwiches and footlong hot dogs—from the outside. They filled a grassy area with wood chips and brought in a couple of picnic tables near the store’s four fuel dispensers to complement the window. Inside, they set up two bar tables with swivel stools for customers who want to sit inside and eat.

Bauer’s moneymakers go beyond his foodservice options. Both Brookings locations include casino areas with up to 10 machines, a popular South Dakota c-store feature and solid profit source. On a good week, his machines can make up to $5,000. The 42-foot-long selection of liquor and spirits Bauer has developed in his Four Hills location also brings in good money. It started as an 8-foot set of wine, but Bauer soon expanded his offer when he saw the section’s early success.

“I was always taught to expand on what’s growing and decrease the things that aren’t,” he says. “My theory is that you’ll never beat the big guys at their own game. You’ve got to do something differ­ent to get ahead.”

Bauer’s theory is evident in his prod­uct offering. He carries premium quality beef from a local rancher, and locally made Dimock Dairy Cheese. He’s also found success carrying a selection of 5-quart containers and gallon buckets of ice cream, one of the reasons he and Becky decided to get into soft-serve. “It’s not hard to sell something people like,” Bauer says.

He took the advice of friends in the ice-cream business to offer two additional things few other c-stores have—sherbet and Flavor Burst. “A Flavor Burst is a little bit of another flavor like lemon or rasp­berry on top of your ice cream,” Bauer says. “All it requires is an attachment to the regular ice-cream machine.”

From those specialized flavors to the local products, Pump ‘N Pak has sought to customize its offering just enough to distinguish it from other c-stores, including even some of the best chains. A Casey’s recently opened 10 blocks from his Four Hills store; regardless, sales at his site were up 10% in September.

Publicize the Prize

Bauer also sees marketing efforts as a way to set himself apart from the competition. He hasn’t gotten into Facebook (“That can haunt you as much as help you”) and didn’t find success with loyalty-card pro­grams (“We were one of the first in and the first out”). But he’s gung-ho about his annual customer appreciation event.

Bauer invites vendors to one of his Brookings store lots to set up canopies, tables and displays, allowing them to sell or give away whatever they want: cou­pons for $1 off milk, hats, shirts, candy bars, lottery tickets, wine samples, etc. Last year, Camel offered cigarettes for $1 a pack. And he attracts customers with free prime-rib sandwiches. Last year, he gave away more than 1,000 meals.

Bauer has been experimenting with a new text-messaging program for the past year through King Side Marketing, sending out gas coupons and in-store offers every Thursday to customers who sign up.

“I gave my employees $1 for every new customer they signed up,” Bauer says, so getting a customer base involved was pretty easy.

He also believes in a consistent radio program. “If you’re going to lose weight, you do it over the long haul, not just by starving yourself for a week,” he says. And marketing is the same: The $250 he spends on radio advertising each month is more effective and less painful than big one-time efforts.

Economic Edge

In the context of the recession, Bauer feels good about his stores’ progress. The Sioux Falls store on the interstate is just getting by, but the rest are making gains. The second Sioux Falls store is up 15% overall and has sustained double-digit growth for the past three years. The new­est store, in Brookings, is growing by 12% on inside sales, 4% on gallons and 6% on customer count.

And he’s found ways to fill his custom­ers’ pockets and his own simultaneously. He brought back the food-stamp pro­gram he offered years ago and is doing about $1,000 per store. “Usually those items are grocery items with about a 50% markup,” he says. “It’s not a bad way to go.”

Bauer has also discovered that if he combines his stores as a buying group for AMCON, his wholesaler, he gets a slightly better rate. “Mom-and-pops out there get overlooked, but they’re the ones who need the discount,” he says. “Even with just four stores together, we get an advantage.”

His economic edge is evidence of a mental edge. Bauer understands what being an independent means for business.

“You’ve got to do something the other guys aren’t doing,” he says. “You’ve got to do something different.”

Plunge in oil prices sets the stage for record margins and boost in in-store sales. Also In This Issue: Profitability skyrockets for top performers! Other channels seek to redefine convenience! The economy enters a new stage. The growing health-and-wellness trend. Fuel demand; oil's slide; multicultural momentum; and data, data, data!

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